IRS Tax News

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  • 18 Jun 2019 12:55 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Treasury Department and Internal Revenue Service today issued legal guidance under the 2017 Tax Cuts and Jobs Act (TCJA) and the Consolidated Appropriations Act of 2018 providing information on certain deductions to cooperatives and their patrons.

    The proposed regulations issued today provide guidance for cooperatives and their patrons on calculating the deduction for qualified business income - the QBI deduction - and the deduction for domestic production activities for agricultural or horticultural cooperatives and their patrons (the Section 199A(g) deduction). In addition, Notice 2019-27, posted today on IRS.gov, contains a proposed revenue procedure providing guidance on methods for calculating W-2 wages for purposes of section 199A(g).

    Final regulations on the new QBI deduction were published on Jan. 18, 2019. The QBI deduction is available for tax years beginning after Dec. 31, 2017, for taxpayers, including certain patrons of cooperatives, with income from a domestic business operated as a sole proprietorship, a partnership, S corporation, trust or estate. The QBI deduction is up to 20 percent of the qualified business income from the business. Some taxpayers may also be allowed a deduction up to 20 percent of qualified real estate investment trust dividends and publicly traded partnership income. 

    Patrons’ deduction

    Certain patrons who conduct business through cooperatives may be able to include patronage dividends and similar amounts they receive from those cooperatives to calculate their own QBI deduction. For example, a farmer receiving patronage dividends from a marketing cooperative through which the farmer sells agricultural products may be able to include these dividends in calculating the QBI deduction from the farmer’s agricultural business. The proposed regulations provide guidance to cooperatives and patrons regarding the QBI deduction.

    Certain patrons, like farmers, must reduce their QBI deduction if they receive qualified payments from specified agricultural or horticultural cooperatives. The QBI deduction must be reduced by either 9 percent of the QBI from each business related to the qualified payments, or 50 percent of the wages allocated to each such business, whichever is the smaller amount. The proposed regulations provide guidance to patrons regarding the reduction to the QBI deduction. 

    Specified agricultural or horticultural cooperatives’ deduction

    Specified agricultural or horticultural cooperatives are allowed a Section 199A(g) deduction for income attributable to domestic production activities, which is similar to the domestic production activities deduction under former Section 199 before its repeal by the TCJA. Cooperatives cannot pass through any portion of their Section 199A(g) deduction to patrons structured as C corporations, unless they are specified agricultural or horticultural cooperatives. The proposed regulations provide guidance to cooperatives and patrons regarding the Section 199A(g) deduction.

    IRS and Treasury welcome public comments on these proposed regulations and notice of proposed revenue procedure. For details on submitting comments, see the proposed regulations and notice. Taxpayers may rely on these proposed regulations if they apply the rules in their entirety until final regulations are published.

    Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.


  • 09 May 2019 3:27 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — During Small Business Week, the Internal Revenue Service is highlighting tax reform changes that impact depreciation and expensing for nearly every business. In some cases, these changes allow small business owners and the self-employed to write off the cost of machinery, equipment and other property more quickly.

    This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners. The IRS is reminding small businesses and self-employed individuals about tax benefits and reporting rules.

    Here is some key information to keep in mind.

    100 percent, first-year ‘bonus’ depreciation

    The bonus depreciation percentage is now 100 percent for qualified property acquired and placed in service after Sept. 27, 2017, and before Jan. 1, 2023. This means that businesses can often write off the full cost of most depreciable property in the first year they use it in their business. Depreciable business assets with a recovery period of 20 years or less and certain other property usually qualify. This means that machinery, equipment, computers, appliances and furniture generally qualify. Special rules apply for longer production period property and certain aircraft.

    In addition, qualified film, television and live theatrical productions are among the types of property that may qualify for 100 percent bonus depreciation.
     
    Businesses can immediately expense more

    Businesses may elect to expense all or part of the cost of what is often referred to as Section 179 property and deduct it in the year they place the property in service. The maximum deduction is increased to $1,000,000, and the phase-out threshold  is increased to $2,500,000. These amounts, adjusted annually for inflation, apply to property placed in service in tax-year 2019.

    Section 179 property includes business equipment and machinery, office equipment, livestock and, if elected, qualified real property. Taxpayers can elect to include certain improvements made to nonresidential real property. See New rules and limitations for depreciation and expensing under the Tax Cuts and Jobs Act for more information.

    Depreciation limitations on luxury automobiles

    The Tax Cuts and Jobs Act (TCJA) changed depreciation limits for passenger vehicles placed in service starting in tax-year 2018. If a business doesn’t claim bonus depreciation, the greatest allowable depreciation deduction is:

    • $10,000 for the first year,
    • $16,000 for the second year,
    • $9,600 for the third year, and
    • $5,760 for each later taxable year in the recovery period.

    If 100 percent bonus depreciation is claimed, the greatest allowable depreciation deduction is:

    • $18,000 for the first year,
    • $16,000 for the second year,
    • $9,600 for the third year, and
    • $5,760 for each later taxable year in the recovery period.

    These amounts apply to property placed in service starting in 2018.

    Applicable recovery period for real property

    The general recovery period for residential rental property is 27.5 years. TCJA changed the alternative depreciation system recovery period for residential rental property from 40 years to 30 years. Under the new law, a real property trade or business electing out of the interest deduction limit must use the alternative depreciation system to depreciate any of its residential rental property. These changes apply starting in tax-year 2018.

    Updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.  Business owners can refer to the Tax Reform Provisions that Affect Businesses page for updates.

    More resources:

    Tax Cuts and Jobs Act: A Comparison for Businesses


  • 08 May 2019 2:02 PM | Maureen Gelwicks (Administrator)

    IRS YouTube videos:
    IRS Withholding Calculator TipsEnglish
    Estimated Tax PaymentsEnglish | Spanish | ASL

    WASHINGTON — As part of Small Business Week, the Internal Revenue Service today reminds small business owners and self-employed people that they can avoid a surprise tax bill and possibly a penalty by making estimated tax payments during the year.

    This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.

    By law, everyone must pay tax as they earn income. Estimated tax is the method used to pay tax on income that is not subject to withholding. For small business owners and self-employed people, that usually means making quarterly estimated tax payments as they earn or receive income during the year. They need to pay as they go, so they don’t owe.

    Individuals, including sole proprietors, partners and S corporation shareholders, generally must make estimated tax payments if they expect to owe tax of $1,000 or more when they file their 2019 tax return. Often, this includes people involved in the sharing economy. Corporations generally must make these payments if they expect to owe tax of $500 or more on their 2019 tax return.

    Estimated tax is used to pay not only income tax but other taxes such as self-employment tax and alternative minimum tax. Estimated tax requirements are different for farmers and fishermen. Publication 505, Tax Withholding and Estimated Tax, has more information about these special estimated tax rules.

    How and when to pay estimated taxes

    The next quarterly estimated tax payment for 2019 is due June 17. Taxpayers may have to pay estimated tax for 2019 if their tax was more than zero in 2018. See the worksheet in Form 1040-ES, Estimated Tax for Individuals, or Form 1120-W, Estimated Tax for Corporations, and Publication 505 for details on how to figure estimated tax payments.

    Using the Electronic Federal Tax Payment System (EFTPS) is the easiest way for individuals and businesses to make estimated tax payments. Using EFTPS, they can access a history of their payments, so they know how much and when they were made. Corporations must deposit payments using the EFTPS. For more information, refer to Publication 542, Corporations.

    Wage-earners who also have business income can often avoid having to pay estimated tax by asking their employer to withhold more tax from their earnings. The IRS urges anyone in this situation to do a Paycheck Checkup, using the IRS Withholding Calculator. If the calculator suggests a change, they can then submit a new Form W-4 to their employer. This form has a special line to enter any additional withholding amount.

    Penalty for underpayment of estimated tax

    Anyone who pays too little tax through withholding, estimated tax payments or a combination of the two may owe a penalty. In some cases, the penalty may apply if their estimated tax payments are late, even if they’re due a refund.

    For tax year 2019, the penalty will generally apply to anyone who pays less than 90 percent of the tax reported on their 2019 income tax return during the year through withholding, estimated tax payments or a combination of the two. People who base their estimated tax payments on last year’s tax will normally avoid a penalty if they pay 100 percent of the amount shown on Line 15 of their 2018 Form 1040 (110 percent if their income was more than $150,000).

    Exceptions to the penalty and special rules apply to some groups of taxpayers, such as farmers, fishermen, casualty and disaster victims, those who recently became disabled and recent retirees. In addition, anyone who receives income unevenly during the year can often avoid or lower the penalty by annualizing their income and making unequal payments throughout the year. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts (or Form 2220, Underpayment of Estimated Tax by Corporations), for more on the penalty. Refer to the Form 1040 Instructions or Form 1120 Instructions for where to report the estimated tax penalty.

    Here’s a reminder for those who still need to file for tax-year 2018. An expanded estimated tax penalty waiver may be available to those who paid too little tax during 2018. See Form 2210 and its instructions and Form 843, Claim for Refund and Request for Abatement, for details.  

    More information:


  • 06 May 2019 2:40 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today reminded small businesses that recent tax reform legislation lowered the backup withholding tax rate to 24 percent and the withholding rate that usually applies to bonuses and other supplemental wages to 22 percent. The agency also urged employers to encourage their employees to check their withholding using the IRS Withholding Calculator.

    This year, National Small Business Week is May 5-11. For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.

    Backup withholding

    Under a key change made by the Tax Cuts and Jobs Act (TCJA) enacted in December 2017, the backup withholding tax rate dropped from 28 percent to 24 percent, effective Jan. 1, 2018. Backup withholding applies in various situations, including when a taxpayer fails to supply their correct taxpayer identification number (TIN) to a payer. Usually, a TIN is a Social Security number (SSN), but in some instances, it can be an employer identification number (EIN), individual taxpayer identification number (ITIN) or adoption taxpayer identification number (ATIN). Backup withholding also applies, following notification by the IRS, where a taxpayer under-reported interest or dividend income on their federal income tax return.

    Publication 1281, Backup Withholding for Missing and Incorrect Name/TINS, now available on IRS.gov, has information designed to help any payer required to impose backup withholding on their payees. Among other things, the publication features answers to 34 frequently asked questions.

    When backup withholding applies, payers must backup withhold tax from payments not otherwise subject to withholding. This includes most payments reported on Form 1099, such as interest, dividends, payments to independent contractors and payment card and third-party network transactions.

    Payees may be subject to backup withholding if they:

    • Fail to give a TIN,
    • Give an incorrect TIN,
    • Supply a TIN in an improper manner,
    • Under-report interest or dividends on their income tax return, or
    • Fail to certify that they’re not subject to backup withholding for under-reporting of interest and dividends.

    To stop backup withholding, the payee must correct any issues that caused it. They may need to give the correct TIN to the payer, resolve the under-reported income and pay the amount owed, or file a missing return. The Backup Withholding page, Publication 505, Tax Withholding and Estimated Tax, and Publication 1335, Backup Withholding Questions and Answers, have more information.

    Payers report any backup withholding on Form 945, Annual Return of Withheld Federal Income Tax. The 2019 form is due Jan. 31, 2020. For more information about depositing backup withholding taxes, see Publication 15, Employer’s Tax Guide. Payers also show any backup withholding on information returns, such as Forms 1099, that they furnish to their payees and file with the IRS.

    Bonuses and other supplemental wages

    TCJA also lowered the tax withholding rates that normally apply to bonuses, back wages, payments for accumulated leave and other supplemental wages. In most cases, the new rate is 22 percent, effective Jan. 1, 2018. For payments exceeding $1 million, the rate is 37 percent. See Publication 15 for details.

    Paycheck Checkup

    Small businesses can help their employees by encouraging them to do a Paycheck Checkup. In addition, any business owner, such as a corporate officer, who receives wages from their business should also consider checking their withholding. The same goes for anyone who has a sideline business but continues to receive wages from another employer.

    Though a good idea any year, checking withholding is especially important this year given the number of changes brought about by the TCJA.

    The easiest way to do a Paycheck Checkup is to use the Withholding Calculator on IRS.gov. Then, based on its recommendations, fill out and submit a new Form W-4. In many instances, this means claiming fewer withholding allowances or having an extra flat-dollar amount withheld from an employee’s pay.  
           
    Taxpayers who itemized in the past who now choose to take advantage of the increased standard deduction, as well as two-wage-earner households, employees with non-wage sources of income and those with complex tax situations, are at most risk of having too little tax withheld from their pay. Boosting tax withholding as early as possible in 2019 is the best way to head off another tax-time surprise next year. Anyone who had an important life change, such as getting married, getting divorced, buying a home or having a baby should also consider a Paycheck Checkup.


  • 02 May 2019 2:54 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — In support of National Small Business Week, May 5-11, the Internal Revenue Service is emphasizing the many IRS online resources available to help small business owners and self-employed individuals handle the tax aspects of their business.

    For more than 50 years, the week has recognized the important contributions of America’s entrepreneurs and small business owners.

    For this year’s Small Business Week, the IRS will issue a series of news releases and tax tips focused on key topics such as:

    • Withholding taxes,
    • Data security tips,
    • Estimated tax payments,
    • Business credits and deductions and
    • Expanded tax benefits for depreciation and expensing.

    The IRS also has products and information on the sharing economy, including a Sharing Economy Tax Center, to help people quickly find answers to tax questions, as well as helpful tips and tax forms for business taxpayers. A YouTube video, Your Taxes in a Sharing Economy, also helps those working in the sharing economy understand their tax responsibilities.

    Small business/ self-employed products


  • 25 Apr 2019 4:38 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service is seeking qualified applicants for nomination to the Electronic Tax Administration Advisory Committee (ETAAC).

    The ETAAC provides an organized public forum for discussion of issues in electronic tax administration, such as prevention of identity theft and refund fraud. ETAAC supports the overriding goal that paperless filing is the preferred and most convenient method of filing tax and information returns. ETAAC members work closely with the Security Summit, a joint effort of the IRS, state tax administrators and the tax industry to fight electronic fraud.

    The IRS is looking for up to 10 qualified individuals who will serve three-year terms beginning in September 2019. Applicants should have experience in such areas as state tax administration, cybersecurity and information security, tax software development, tax preparation, payroll and tax financial product processing, systems management and improvement and implementation of customer service initiatives. The IRS also encourages representatives from consumer groups with an interest in tax issues to apply. Applications will be accepted through May 29, 2019.

    Nominations of qualified individuals may be made by letter and received from organizations or the individuals themselves. Applicants should complete the ETAAC application and include a short statement of interest and a resume. In addition, they should describe and document their qualifications, past and current affiliations and dealings with cybersecurity and electronic tax administration. Applicants must complete and submit a tax check waiver form and are also subject to an IRS practitioner background check and an FBI criminal background check. More information is available on IRS.gov.

    ETAAC is a Federal Advisory Committee established by the Internal Revenue Service Restructuring and Reform Act of 1998.

    Questions about the ETAAC and the application process can be e-mailed to publicliaison@irs.gov.


  • 09 Apr 2019 9:24 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today announced it seeks civic-minded volunteers to serve on the Taxpayer Advocacy Panel (TAP). The TAP is a federal advisory committee that listens to taxpayers, identifies major taxpayer concerns and makes recommendations for improving IRS service and customer satisfaction.

    Taxpayers interested in serving on the panel may apply through May 3, 2019.

    To the extent possible, the TAP includes members from all 50 states, the District of Columbia, Puerto Rico and one international member who represents U.S. taxpayers working, living or doing business abroad or in a U.S. territory. Each member is appointed to represent the interests of taxpayers in their geographic location as well as taxpayers overall.

    “In trying to comply with an increasingly complex tax system, taxpayers may find they need different services than the IRS is currently providing,” said Nina E. Olson, the National Taxpayer Advocate. “The TAP is vital because it provides the IRS with the taxpayers’ perspective as well as recommendations for improvement. This helps the IRS deliver the best possible service to assist taxpayers in meeting their tax obligations.” 

    The TAP reports annually to the Secretary of the Treasury, the IRS Commissioner and the National Taxpayer Advocate. The Office of the Taxpayer Advocate is an independent organization within the IRS that provides support for and oversight of the TAP.

    To be a member of the TAP, a person must be a U.S. citizen, be current with his or her federal tax obligations, be able to commit 200 to 300 volunteer hours during the year and pass a Federal Bureau of Investigation criminal background check. Members cannot be federally-registered lobbyists. In addition, current Department of the Treasury or IRS employees cannot serve on the panel, and former Department of the Treasury or IRS employees and former TAP members must have a three-year separation from their service to be considered for appointment. Tax practitioner applicants must be in good standing with the IRS (meaning not currently under suspension or disbarment).

    New TAP members will serve a three-year term starting in December 2019. Applicants chosen as alternate members will be considered to fill any vacancies that open in their areas during the next three years.

    The TAP is seeking members in the following locations: Alaska, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Illinois, Indiana, Iowa, Louisiana, Minnesota, Mississippi, Missouri, Nebraska, New York, North Carolina, North Dakota, Pennsylvania, Puerto Rico, Rhode Island, South Dakota, Texas, Utah, Vermont, West Virginia, Wisconsin and Wyoming.

    The panel is seeking alternates in the following locations: Alaska, Arkansas, Connecticut, Delaware, Florida, Hawaii, Idaho, Kansas, Maine, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Vermont and Wyoming.

    Federal advisory committees are required to have a balanced membership in terms of the points of view represented. As such, applicants from under-represented groups, like Native Americans and non-tax professionals, are encouraged to apply. All timely applications, however, will be given consideration.

    The IRS is pleased to announce 25 new members were selected for 2019. The new members join the returning members to round out the 59-member panel for 2019.

    Applications for the TAP will be accepted between April 8, 2019, and May 3, 2019. Apply online. For additional information about the TAP or the application process, visit www.improveirs.org or call 888-912-1227 (a toll-free call) and select prompt number five. Callers who are outside of the U.S. may call 214-413-6523 (not a toll-free call). Or contact the TAP staff at taxpayeradvocacypanel@irs.gov for assistance.


  • 08 Apr 2019 1:30 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service and the Security Summit partners today announced new results from 2018 that show major progress in the fight against tax-related identity theft and added protection for thousands of taxpayers and billions of dollars.

    Since forming the Security Summit in 2015, the IRS, state tax agencies and the private-sector tax industry enacted joint initiatives, many invisible to taxpayers, that have resulted in fewer fraudulent tax returns entering tax processing systems, fewer confirmed identity theft returns being stopped, fewer bad refunds being issued and fewer Americans identifying themselves as victims of tax-related identity theft.

    “The IRS and the Security Summit continue to make tremendous inroads in the battle against identity theft,” said IRS Commissioner Chuck Rettig. “In 2018, our partnership protected more taxpayers and more tax dollars from tax-related identity theft. At a time when many in the private sector continue to struggle with these issues, the tax community has made major progress working together to stop identity theft and refund fraud.”

    Key annual indicators mark major progress

    The Security Summit held its first meetings in 2015 and enacted its first round of initiatives in 2016. The Summit partners shared dozens of elements from tax returns that could be indicators of fraud such as the length of time to prepare the return. The IRS enhanced and expanded its fraud filters and added protections to business as well as individual tax returns. States requested more information such as driver’s license numbers. Software providers strengthened password requirements to protect accounts and added multi-factor identity authentication. Debit card companies tightened their practices, and more financial institutions helped recover fraudulent refunds.

    As part of this team effort, the Summit partners established the Identity Theft Tax Refund Fraud Information Sharing and Analysis Center (IDTTRF-ISAC) to detect and prevent identity theft tax refund fraud. There are now 65 groups participating in the ISAC, able to react and respond quickly as scams arise.

    As the Summit partners made these and other changes, the overall results improved immediately as fewer fraudulent returns entered IRS processing systems. Here are key, calendar-year 2018 indicators and how they compare to the 2015 base year:

    • Between 2015 and 2018, the number of taxpayers reporting they were identity theft victims fell 71 percent. These are taxpayers who file identity theft affidavits. In 2018, the IRS received 199,000 reports from taxpayers compared to 677,000 in 2015. This was the third consecutive year this number declined. There were 242,000 identity theft reports in 2017 and 401,000 in 2016. 
    • Between 2015 and 2018, the number of confirmed identity theft returns stopped by the IRS declined by 54 percent. For 2018, there was a slight, 9 percent uptick in the number of confirmed identity theft returns, 649,000 compared to 597,000 in 2017. But the 2018 count is still significantly below the 883,000 in 2016 and the 1.4 million in 2015.
    • Between 2015 and 2018, the IRS protected a combined $24 billion in fraudulent refunds by stopping the confirmed identity theft returns. In 2018, the 649,000 confirmed fraudulent returns tried to obtain $3.1 billion in refunds. The IRS protected $6 billion in 2017, $6.4 billion in 2016 and $8.7 billion in 2015.
    • Between 2015 and 2018, financial industry partners recovered an additional $1.4 billion in fraudulent refunds. The financial industry is a key partner in fighting identity theft, helping the IRS and states recover fraudulent refunds that may have been issued. But as fewer fraudulent tax returns enter the system, fewer fraudulent refunds are being issued. In 2018, financial institutions recovered 84,000 federal refunds totaling $112 million for the IRS. Institutions recovered 144,000 refunds worth $204 million in 2017, 124,000 refunds worth $281 million in 2016 and 249,000 refunds totaling $852 million in 2015.

    “Despite these major successes, more work remains,” Rettig said. “Identity thieves are often members of sophisticated criminal syndicates, based here and abroad. They have the resources, the technology and the skills to carry on this fight. The IRS and the Summit partners must continue to work together to protect taxpayers as cyberthieves continue to evolve and adjust their tactics.”

    Identity thieves adjust; take aim at businesses, tax professionals

    As the Security Summit partners make progress, identity thieves continue to change their targets and tactics. Two areas of concern are business identity theft and data theft from tax professionals.

    The number of businesses reporting they are victims of tax-related identity theft increased by 10 percent for 2018, with 2,450 reports compared to 2,233 reports in 2017. Following in the footsteps of successful work protecting individual taxpayers, the Security Summit partners have enacted similar protections for business tax returns given that business identity theft is a relatively new area.

    Identity thieves use several different tactics with businesses. They may file a fraudulent tax return, a fraudulent quarterly tax payment or use stolen Employer Identification Numbers (EINs) to create fraudulent Forms W-2. Thieves also may impersonate business executives to convince payroll or finance employees to disclose employee W-2 information or make wire transfers. Partnerships, trusts and estates also can be at risk for tax-related identity theft.

    Because of Security Summit efforts, criminals need more personal data details to impersonate taxpayers, so they have targeted tax professionals and their information. Theft of taxpayer information held by tax professionals remains a major issue. Thieves can breach practitioners’ computer systems, steal client data and file fraudulent tax returns before a preparer may even know they have been victimized.

    Thieves may also steal the tax practitioners Electronic Filing Identification Number (EFIN) or Preparer Tax Identification Number (PTIN) to help with identity theft and filing false returns. Tax professionals who experience a data theft should contact their IRS stakeholder liaison immediately for assistance.

    Individuals, businesses and tax professionals can find more information about identity theft, how to identify it, how to prevent it and how to report it at IRS.gov/identitytheft


  • 04 Apr 2019 4:40 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today reminded U.S. citizens and resident aliens, including those with dual citizenship, that if they have a foreign bank or financial account, April 15, 2019, is the deadline to file their annual Report of Foreign Bank and Financial Accounts (FBAR). They should also check to see if they have a U.S. tax liability and a federal tax return filing requirement.

    Here is a rundown of key points to keep in mind:

    Deadline for reporting foreign accounts
    The deadline for filing the FBAR is the same as for a federal income tax return. This means that the 2018 FBAR, Form 114, must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) by April 15, 2019. FinCEN grants filers missing the April 15 deadline an automatic extension until Oct. 15, 2019, to file the FBAR. Taxpayers don’t file the FBAR with individual, business, trust or estate tax returns. Taxpayers who want to paper-file their FBAR must call the Financial Crimes Enforcement Network’s Regulatory Helpline to request an exemption from e-filing.

    In general, the filing requirement applies to anyone who had an interest in, or signature or other authority, over foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2018. Because of this threshold, the IRS encourages taxpayers with foreign assets, even relatively small ones, to check if this filing requirement applies to them. The form is only available through the BSA E-Filing System website.

    Taxpayers with foreign financial accounts that report their accounts to the U.S Treasury Department should also visit the FBAR Fact Sheet posted on IRS.gov.

    IRS ends Offshore Voluntary Disclosure Program (OVDP)
    The IRS will continue to use tools besides voluntary disclosure to combat offshore tax avoidance, including taxpayer education, whistleblower leads, civil examination and criminal prosecution. The IRS continues to use streamlined filing compliance procedures that will remain in place and be available to eligible taxpayers. But, as with OVDP, the IRS said it may end the streamlined filing compliance procedures at some point. Full details of the OVDP and streamlined procedures are available at Options Available for U.S. Taxpayers with Undisclosed Foreign Financial Assets.

    Most people abroad need to file
    An income tax filing requirement generally applies even if a taxpayer qualifies for tax benefits, such as the Foreign Earned Income exclusion or the Foreign Tax credit, which substantially reduce or eliminate U.S. tax liability. These tax benefits are only available if an eligible taxpayer files a U.S. income tax return.

    A special extended filing and payment deadline applies to U.S. citizens and resident aliens who live and work abroad. For U.S. citizens and resident aliens whose tax home and abode are outside the United States and Puerto Rico, the income tax filing and payment deadline is June 17, 2019. Taxpayers have two extra days because the normal extended deadline—June 15—falls on a Saturday this year.  The same applies for those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return.

    Interest, currently at the rate of 6 percent per year, compounded daily, will apply to any payment received after the regular April 15 deadline. See U.S. Citizens and Resident Aliens Abroad for details.

    Nonresident aliens who received income from U.S. sources in 2018 also must determine whether they have a U.S. tax obligation. The filing deadline for nonresident aliens is April 15. See Taxation of Nonresident Aliens on IRS.gov.

    Special income tax return reporting for foreign accounts and assets
    In addition to the annual Report of Foreign Bank and Financial Accounts (FBAR) requirements outlined above, federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report these items for the country in which each account is located.

    Also, separate from the foreign accounts reporting requirements above, certain taxpayers may also have to complete and attach to their return Form 8938, Statement of Specified Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. See the instructions for this form for details.

    Specified domestic entity reporting
    Certain domestic corporations, partnerships and trusts that are considered formed for the purpose of holding (directly or indirectly) specified foreign financial assets must file Form 8938 if the total value of those assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year.

    For more information on specified domestic entity reporting, as well as the types of specified foreign financial assets that must be reported, see Do I need to file Form 8938, “Statement of Specified Foreign Financial Assets”? and its instructions.

    Report in U.S. dollars
    Any income received, or deductible expenses paid in foreign currency must be reported on a U.S. tax return in U.S. dollars. Likewise, any tax payments must be made in U.S. dollars.

    Both FinCen Form 114 and IRS Form 8938 require the use of a December 31 exchange rate for all transactions, regardless of the actual exchange rate on the date of the transaction. Generally, the IRS accepts any posted exchange rate that is used consistently. For more information on exchange rates, see Foreign Currency and Currency Exchange Rates.

    Expatriate reporting
    Taxpayers who relinquished their U.S. citizenship or ceased to be lawful permanent residents of the United States during 2018 must file a dual-status alien tax return, attaching Form 8854, Initial and Annual Expatriation Statement. A copy of the Form 8854 must also be filed with Internal Revenue Service, Philadelphia, PA 19255-0049, by the due date of the tax return (including extensions). See the instructions for this form and Notice 2009-85, Guidance for Expatriates Under Section 877A, for further details.

    Choose Free File or e-file
    U.S. citizens and resident aliens living abroad can use IRS Free File to prepare and electronically file their tax returns for free. This means both U.S. citizens and resident aliens living abroad with adjusted gross incomes (AGI) of $66,000 or less can use brand-name software to prepare their returns and then e-file them for free. A limited number of companies provide software that can accommodate foreign addresses.

    A second option, Free File Fillable Forms, the electronic version of IRS paper forms, has no income limit and is best suited to people who are comfortable preparing their own tax return. Both the e-file and Free File electronic filing options are available until Oct. 15, 2019, for anyone filing a 2018 tax return. Check out the e-file link on IRS.gov for details on the various electronic filing options. Free File is not available to nonresident aliens required to file a Form 1040NR.

    More information available
    Any U.S. taxpayer here or abroad with tax questions can refer to the International Taxpayers page and use the online IRS Tax Map and the International Tax Topic Index to get answers. These online tools group IRS forms, publications and web pages by subject and provide users with a single-entry point to

    Taxpayers who are looking for return preparers abroad should visit the Directory of Federal Tax Return Preparers with Credentials and Select Qualifications.

    To help avoid delays with tax refunds, taxpayers living abroad should visit Helpful Tips for Effectively Receiving a Tax Refund for Taxpayers Living Abroad on IRS.gov.

    More information on the tax rules that apply to U.S. citizens and resident aliens living abroad can be found in Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, available on IRS.gov.


  • 02 Apr 2019 2:01 PM | Maureen Gelwicks (Administrator)

    WASHINGTON — The Internal Revenue Service today urged taxpayers to file an accurate tax return on time, even if they owe but can’t pay in full. The IRS also recommends that taxpayers do a Paycheck Checkup early in 2019 to avoid having too much or too little tax withheld.

    Most taxpayers are being affected by major tax law changes. While most will get a tax refund, others may find that they owe taxes. Those who owe may qualify for a waiver of the estimated tax penalty that normally applies. See Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, and its instructions for details.

    This news release is part of a series called the Tax Time Guide, a resource to help taxpayers file an accurate tax return. Additional help is available in Publication 17, Your Federal Income Tax, and the tax reform information page.

    The filing deadline to submit 2018 tax returns is Monday, April 15, 2019, for most taxpayers. Because of the Patriots’ Day holiday on April 15 in Maine and Massachusetts and the Emancipation Day holiday on April 16 in the District of Columbia, taxpayers who live in Maine or Massachusetts have until April 17 to file their returns.

    Checking on refunds

    The IRS issues nine out of 10 refunds in less than 21 days. Using the “Where’s My Refund?” online tool, taxpayers can start checking on the status of their return within 24 hours after the IRS receives an e-filed return or four weeks after the taxpayer mailed a paper return. The tool has a tracker that displays progress through three phases: (1) Return Received; (2) Refund Approved; and (3) Refund Sent.

    All that is needed to use “Where’s My Refund?” is the taxpayer’s Social Security number, tax filing status (such as single, married, head of household) and exact amount of the tax refund claimed on the return.

    “Where’s My Refund?” is updated no more than once every 24 hours, usually overnight, so there’s no need to check the status more often.

    Check withholding

    The IRS encourages taxpayers to review their tax withholding using the IRS Withholding Calculator and make any needed adjustments early in 2019. Taxpayers should check their withholding each year and when life changes occur, such as marriage, childbirth, adoption or buying a home. Doing a Paycheck Checkup can help taxpayers avoid having too little or too much tax withheld from their paychecks. The IRS reminds taxpayers that they can generally control the size of their tax refund by adjusting their tax withholding.

    For 2019, it’s important to review withholding and do a Paycheck Checkup. This is especially true for taxpayers who adjusted their withholding in 2018 – specifically in the middle or later parts of the year. And it’s also important for taxpayers who received a tax bill when they filed this year or want to adjust the size of their tax refund for next year.

    How to make a tax payment

    Taxpayers should visit the “Pay” tab on IRS.gov to see their payment options. Most tax software products give taxpayers various payment options, including the option to withdraw the funds from a bank account. These include:

    • IRS Direct Pay offers taxpayers a free, fast, secure and easy way to make an electronic payment from their bank account to the U.S. Treasury.
    • Use an approved payment processor to pay by credit or debit card for a fee.
    • Mail checks or money orders made out to the U.S. Treasury.
    • Make monthly or quarterly tax payments using IRS Direct Pay or through the Electronic Federal Tax Payment System.

    Can’t pay a tax bill?

    Everyone should file their 2018 tax return by the tax filing deadline regardless of whether they can pay in full. Taxpayers who can’t pay all their taxes have options including: 

    • Online Payment Agreement — Individuals who owe $50,000 or less in combined income tax, penalties and interest and businesses that owe $25,000 or less in payroll tax and have filed all tax returns may qualify for an Online Payment Agreement. Most taxpayers qualify for this option and an agreement can usually be set up on IRS.gov in a matter of minutes.
    • Installment Agreement — Installment agreements are paid by direct deposit from a bank account or a payroll deduction.
    • Delaying Collection — If the IRS determines a taxpayer is unable to pay, it may delay collection until the taxpayer's financial condition improves.
    • Offer in Compromise (OIC) — Taxpayers who qualify enter into an agreement with the IRS that settles their tax liability for less than the full amount owed.

    Taxpayers can find answers to questions, forms and instructions and easy-to-use tools online at IRS.gov. They can use these resources to get help when it’s needed at home, at work or on the go.

    More resources:


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